Ethos shares fall 10% post tepid listing

Ethos, one of the leading premium and luxury watch retailers, made a weak debut on domestic bourses today, in an otherwise positive broader market. The tepid listing was in line with market expectations as it traded at discount in the grey market ahead of its debut on Dalal Street. The ₹472-crore initial public offering (IPO) of the company also failed to garner a strong response from investors, although it managed to fully subscribe on the final day of the issue.

Shares of Ethos got listed at ₹830 on the Bombay Stock Exchange (BSE), a discount of 5.5% against the upper band of the issue price of ₹836-878 apiece. On the National Stock Exchange (NSE), the stock opened 6% lower at ₹825.

Post listing, the stock declined further and slipped 10% to hit a low of ₹790.05 apiece on the BSE. It touched a high of ₹839.65. In a similar trend, it hit a high and low of ₹839.95 and ₹791, respectively, on the NSE. On the volume front, 1.03 lakh shares worth ₹8.33 crore had changed hands over the counter on the BSE so far, while market capitalisation stood at ₹1,858.60 crore. Meanwhile, the BSE Sensex was trading 1,026 points higher at 55,911 levels.

The premium watch retailer had raised ₹472 crore through IPO, which consisted of a fresh issue of equity shares worth up to ₹375 crore and an offer for sale of 1,108,037 shares by shareholders and promoters amounting to ₹97.29 crore. The three-day IPO opened for subscription on May 18 and closed on May 20. The issue was subscribed 1.04 times on the final day, with quotas reserved for qualified institutional investors (QIB) and non-institutional investors (NII) subscribing 1.06 times and 1.48 times, respectively. The portion set aside for retail investors was booked only 0.84 times.

Analysts at ICICI Direct Research had assigned “AVOID” rating to the IPO and recommended investors to await consistency in improvement in profit metrics that the company has exhibited in recent quarters. Over the last five years, revenues have grown at a moderate pace of around 11% CAGR in FY17-22 (annualising 9MFY22 sales). The company has clocked in average PAT margins of 2-2.5% (except for 9MFY22 wherein the company reported higher PAT margins of 3.8%).

Ethos is one of the largest luxury and premium watch retail players in India having 13% share of total retail sales in the premium and luxury segment and a share of 20% in the luxury segment. The company has a chain of 50 physical retail stores in 17 cities in India in a multi store format and offers an Omni channel experience to its customers through its website and social media platforms. It has a sizeable portfolio of premium and luxury watches in India enabling it to retail 50 international premium and luxury watch brands such as Omega, IWC Schaffhausen, Jaeger LeCoultre, Panerai, Bvlgari, H Moser & Cie, Rado, Longines, Baume & Mercier, Oris SA, Corum, Carl F Bucherer, Tissot, Raymond Weil, Louis Moinet and Balmain.